Risk & Crisis Management
crisis management : OH LORD, WON’T YOU BUY ME A MERCEDES HOME
Du : 03/02/2009
In the wide world, a four-letter word rules the headlines: Jobs. Lost jobs.
Earnings [or rather, quarterly financial results] pour in, reflecting an economy that ground to a halt in the fourth quarter. Gloom’s parked itself like an inverted weather front, with no where else really to go.
Then, to make Monday just about as bleak as one can be, we learned that our friends, the Buescher family, needed to file for Chapter 11 bankruptcy protection. Big Builder reported the filing yesterday. Builderonline.com has compiled a list of public and private companies that have gone under, or are struggling for survival under re-org.
In the filing, Mercedes requested that the court consider its bankruptcy and that of its subsidiaries as one case. They include Space Coast Truss, Mercedes Homes of Texas Holding, Suntree Office Complex, Engineering and Drafting Services, Mercedes Homes of the Carolinas, MHI Holding Company, Mercedes homes of Texas LTD, MHI Building Products, Solid Wall Systems, and Dairy Towns Community Developers.
It also asks the court’s permission to hire a handful of consultants to help the company reorganize. Odyssey Capital Group is being asked to help value the company. Alvarez & Marsal North America is proposed as the chief restructuring advisor, and Michael P. Kahn Associates is suggested as a special advisor to help the company raise financing. Richard M. Williamson, a managing director with Alvarez & Marsal and co-head of the firm’s West Region, is proposed as chief restructuring officer.
Mercedes, which builds in Florida, Texas, and North and South Carolina, has built more than 40,000 homes since its start in 1983. That year the company, founded by Howard Buescher and his daughter Susah Girard, built 35 homes. A brief statement from the company, published in Monday’s Palm Beach Post, lays the blame squarely at the feet of the Federal Deposit Insurance Corporation.
“As is the case throughout the nation and in the entire residential construction industry, the company has suffered from the prolonged weakness in the economies of the markets where it does business,” Mercedes says in a statement. “In addition, the company has also suffered liquidity strains due, in part, to the takeover of one of its lenders in its lending syndicate by the FDIC.”
We’d heard that the real reason for the company’s demise was the classic “too long on land” noose that has and will asphixiate many of the companies doing business as home builders for the better part of the last two decades. Howard Buescher, who’d earned his stripes as a super salesman in the Ryan Homes company during the 1970s, paid close heed to Ryan’s ultra-conservative land and lot strategy into the first few years of this decade.
Then, amid giddy growth, the company popped out of its conservative cocoon and started showing up at the land buying dance in 2005 and 2006. The demographics and the “fundamentals” then supported the aggressive moves. Believing one’s own hype was practically a part of every home building company’s mission statement.
The correction, deflation, and ultimate reset of new-home prices and costs will transform home building. Harshly, the nation needs new homes cyclically, but not necessarily now. And the economy needs new home building cyclically, but it doesn’t necessarily need the ones who’ve been the power houses up to now. It’s a manufacturing, merchandising, and marketing skill set that doesn’t necessarily reward long years of experience.
The question now is, which of the following power houses [based on 2006 performance] in home building will not make it on our list of power outages in 2009?
Related Articles
[15/05/2008] USB shuffles investment bank, beefs up risk management
[31/05/2007] Bally Total Fitness Reaches Agreement in Principle on Proposed Terms of a Consensual Restructuring With Holders of Senior Subordinated Notes
[08/05/2006] Changes at ISM, IGDA, THQ, ELSPA & More
Earnings [or rather, quarterly financial results] pour in, reflecting an economy that ground to a halt in the fourth quarter. Gloom’s parked itself like an inverted weather front, with no where else really to go.
Then, to make Monday just about as bleak as one can be, we learned that our friends, the Buescher family, needed to file for Chapter 11 bankruptcy protection. Big Builder reported the filing yesterday. Builderonline.com has compiled a list of public and private companies that have gone under, or are struggling for survival under re-org.
In the filing, Mercedes requested that the court consider its bankruptcy and that of its subsidiaries as one case. They include Space Coast Truss, Mercedes Homes of Texas Holding, Suntree Office Complex, Engineering and Drafting Services, Mercedes Homes of the Carolinas, MHI Holding Company, Mercedes homes of Texas LTD, MHI Building Products, Solid Wall Systems, and Dairy Towns Community Developers.
It also asks the court’s permission to hire a handful of consultants to help the company reorganize. Odyssey Capital Group is being asked to help value the company. Alvarez & Marsal North America is proposed as the chief restructuring advisor, and Michael P. Kahn Associates is suggested as a special advisor to help the company raise financing. Richard M. Williamson, a managing director with Alvarez & Marsal and co-head of the firm’s West Region, is proposed as chief restructuring officer.
Mercedes, which builds in Florida, Texas, and North and South Carolina, has built more than 40,000 homes since its start in 1983. That year the company, founded by Howard Buescher and his daughter Susah Girard, built 35 homes. A brief statement from the company, published in Monday’s Palm Beach Post, lays the blame squarely at the feet of the Federal Deposit Insurance Corporation.
“As is the case throughout the nation and in the entire residential construction industry, the company has suffered from the prolonged weakness in the economies of the markets where it does business,” Mercedes says in a statement. “In addition, the company has also suffered liquidity strains due, in part, to the takeover of one of its lenders in its lending syndicate by the FDIC.”
We’d heard that the real reason for the company’s demise was the classic “too long on land” noose that has and will asphixiate many of the companies doing business as home builders for the better part of the last two decades. Howard Buescher, who’d earned his stripes as a super salesman in the Ryan Homes company during the 1970s, paid close heed to Ryan’s ultra-conservative land and lot strategy into the first few years of this decade.
Then, amid giddy growth, the company popped out of its conservative cocoon and started showing up at the land buying dance in 2005 and 2006. The demographics and the “fundamentals” then supported the aggressive moves. Believing one’s own hype was practically a part of every home building company’s mission statement.
The correction, deflation, and ultimate reset of new-home prices and costs will transform home building. Harshly, the nation needs new homes cyclically, but not necessarily now. And the economy needs new home building cyclically, but it doesn’t necessarily need the ones who’ve been the power houses up to now. It’s a manufacturing, merchandising, and marketing skill set that doesn’t necessarily reward long years of experience.
The question now is, which of the following power houses [based on 2006 performance] in home building will not make it on our list of power outages in 2009?
Related Articles
[15/05/2008] USB shuffles investment bank, beefs up risk management
[31/05/2007] Bally Total Fitness Reaches Agreement in Principle on Proposed Terms of a Consensual Restructuring With Holders of Senior Subordinated Notes
[08/05/2006] Changes at ISM, IGDA, THQ, ELSPA & More